USDCAD Rising Channel Resistance (Sept 25, 2014)

However, price has just encountered resistance at the top of the channel and may be due south.

The channel resistance lines up with the 1.1150 minor psychological level and the bottom of the channel is near the 1.1000 mark, paving the way for a potential 150-pip trade if price moves lower.

Stochastic is indicating a possible bounce though, as the indicator is moving out of the oversold zone. In this case, another test of the channel resistance might be possible or perhaps an actual breakout if buying pressure is very strong. A break past the 1.1200 mark could confirm that more gains are in the cards for USDCAD.

On the other hand, a return in selling pressure could lead to a drop to 1.1000 and a potential break of channel support if the downward momentum is strong enough.

Bear in mind that data from Canada has mostly disappointed, as the recent retail sales figures fell short of expectations. US durable goods orders data is due today and strong figures might lead to an upside channel break.

By Kate Curtis from Trader's Way